Nk Track Hit With $11 Million In Claims

Colonial Downs Disputes Liens

NEW KENT — The general contractor for Colonial Downs has filed court claims seeking $11.85 million from the racetrack, citing the track's ``failure and/or refusal to pay.''

Colonial Downs, which has a $29 million contract with Norglass, disputes the claims, known as mechanic's liens.

The five liens, filed in New Kent County Circuit Court, could represent the first steps in a foreclosure suit against Colonial Downs. That could force the sale of the track's property to pay any claims found to be legitimate, although the dispute more likely will be settled.

An attorney for Norglass, the Ohio-based general contractor responsible for paying many subcontractors who worked at the racetrack, said Colonial Downs has not paid Norglass since May. The liens cover retainer fees and bills for both contracted jobs and additional work not included in the contract.

``We're simply looking to protect our rights and those of the subcontractors who sweated to get this job done,'' said Norglass attorney Jim Thompson.

Colonial Downs attorney James Weinberg said the problem is not one of cash flow. Not all work at the track has been completed, Weinberg said, and Norglass also is asking for some amounts that are incorrect or already have been paid.

``Our official statement right now is that we are checking into the numbers,'' Weinberg said. ``We hope to be able to make a more detailed statement in the near future.''

Colonial Downs President O.J. Peterson also has said some work was subpar, including a roof that leaks and an improperly painted grandstand floor that peeled during opening day.

The liens break down as follows:

* $5.4 million for unpaid bills from June to August.

* $2.3 million for keeping Norglass on retainer.

* $2.2 million for work not included in the original contract.

* $1.6 million for bills in September.

* $364,500 for bills in October.

Thompson said Norglass plans to file an additional lien for $300,000 to cover other October bills. The rest of the $29 million contract, Thompson said, has been paid.

Weinberg said Colonial Downs has a ``punch list,'' or a list of incomplete jobs, that must be finished before the retainer fees are released.

Thompson said the contract dictated that retainer fees be paid when the facility was complete enough for use - which it was, Thompson said, when it opened Sept. 1. He also said Norglass did not receive the punch list until Oct. 29, more than two weeks after the track finished its first meet.

``How are we supposed to complete the jobs without seeing a punch list?'' Thompson asked.

Weinberg denied that the punch list wasn't released until Oct. 29. He did not elaborate, saying the track would release a more detailed statement soon.

Don Price - executive secretary of the Virginia Racing Commission, which regulates Colonial Downs - has been looking into the dispute. The commission could order the track to make payments.

Price, who was not available for comment Monday, has said his impression is that the problem is a dispute between Norglass and Colonial Downs, rather than a cash flow problem for the new racetrack. The Racing Commission's next meeting is Nov. 19.

Colonial Downs last filed a quarterly financial report with the Securities and Exchange Commission in August, before the racing meet. On June 30, the end of the second quarter, Colonial Downs had $63 million in total assets, $24 million of which was in cash.

Colonial Downs plans to file its next quarterly report Friday.

The track's ``handle,'' the amount bet by race-goers, was $6.1 million for the thoroughbred meet - about half what the company had hoped for.

The track plans a 50-day harness meet beginning in April.

Colonial Downs stock closed Monday at $5.38 - off 6 cents for the day and the lowest since $9.25 on Sept. 2, the day after the track opened.

Norglass has six months to file a foreclosure suit, but Thompson said that ``would happen sooner rather than later if Colonial Downs does not start a meaningful dialogue in the near future.''

Weinberg said he expects the matter to be settled before such action is taken.